You may need beefed-up travel insurance to cover you in case of terrorism

Terrorist attacks — like the deadly bombings at the airport and
a subway station in Brussels — cause not only devastation but also
major disruptions, shutting down transportation systems and
stranding travelers. Acts of terror tend to spark renewed interest
in travel insurance.

“After 9/11, there was a surge of interest in travel insurance,”
says Linda Kundell, spokeswoman for the U.S. Travel Insurance
Association in New York. “When you have events of this
magnitude, people understandably become more interested.”

Most travel insurance plans cover all nonrefundable, prepaid
travel expenses for delays or cancellations due to acts of nature.
The travel delay portion of a plan can provide $150 to $250 per day
for meals and accommodations up to a $1,500 maximum limit,
depending on the policy, according to Jim Grace, president of
travel insurance comparison site InsureMyTrip.

But terrorism is different.

Man-made events

A standard travel insurance plan typically does not cover
cancellation for a man-made event, including acts of terrorism,
policyholders whose flight or cruise is delayed or may be covered
under the travel-delay provisions of their policy, according to
Kundell.

“Now if the destination becomes uninhabitable, that is often a
covered peril,” she says

Confused? Let’s break it down. According to the Insurance Information Institute in New York, travel
insurance packages typically include coverage for the following:
trip cancellation, travel delay, lost or delayed baggage, medical,
dental, emergency evacuation, 24-hour traveler assistance and
accidental death. Some policies include options for rental car
collision and damage coverage.

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Some policies also include options for rental-car collision and
damage coverage.

The cost of travel insurance

The institute estimates the cost of travel insurance at 5% to 7%
of the price of the trip. Thus, a $5,000 Roman holiday would cost
roughly $250 to $350 to insure.

You can purchase additional peace of mind with a
cancel-for-any-reason — including terrorism — policy. Kundell says
the upgrade, which typically adds 30% to the overall cost of a
travel insurance policy, “insures against a greater number of
incidents, including ‘I don’t feel like going.’ If you’re nervous,
this coverage can be a good thing.”

Flight insurance — those inexpensive policies underwritten for
the airlines by the same companies that offer travel insurance —
insures only the air-travel portion of your trip. Such limited
coverage may not fully reimburse you should you have to cancel or
postpone a nonrefundable flight due to illness, or if the flight is
canceled due to weather, according to the U.S. Travel Insurance
Association.

Travel insurance not only protects you should illness strike or
your tour operator closes down. Its medical and 24-hour
assistance/evacuation coverage can stave off a potentially
catastrophic financial blow should you require emergency assistance
aboard a cruise ship or in a foreign country.

When to buy

Kundell notes that it’s important to pay close attention to time
frames when purchasing travel insurance. Some travel delay coverage
kicks in within 4 to 6 hours, while others don’t begin until 24
hours have passed. Similar time frames govern how close to
departure you can cancel your trip; 48 hours is common.

“You should buy your policy within 2 weeks of prepaying for your
trip because some pre-existing conditions are typically waived if
you purchase within that time period,” says Kundell.

How can you tell if you need travel insurance? That depends on
your personal and financial situation and the nature of the trip.
Is your health likely to force you to cancel or postpone your trip?
How much would you pay out of pocket for food and lodging if your
flight were delayed, and what is a likelihood of that happening
given your destination, seasonal weather, etc.? Are you exploring
Bora Bora for the first time or taking a leisurely Alaskan cruise
with your parents?

“The rule of thumb would be to ask yourself: What do you stand
to lose?” says Kundell. “For some people, $200 is a lot of money.
Others can afford to lose $200. It’s a decision each person has to
make.”